The pair are rumoured to have broken up after a heated argument while on holiday over the weekend.
One Direction singer Styles was spotted in a hot tub with Bravo TV presenter Hermione Way while partying on Sir Richard Branson's Necker Island, reports The Sun.
"Harry was fuming as the row with Taylor got really bitter and a lot of things were said that they both didn't mean, a source close to the star claimed.
"But by the time he arrived at Sir Richard's place and saw the luxury and women holidaying there, he soon calmed down.
"Not only that - by the time he jumped in the island's hot tub and splashed around with Hermione, he was back on form. He couldn't keep his eyes off her all the time he was there.
"There was a lot of flirting in the tub and Hermione was loving the attention as they necked champagne and gobbled sushi."
[Hermione on Twitter]
The source added: "Hermione's a really bubbly girl who's not shy about showing off her body or having a good time. She really put a smile on Harry's face after his row with Taylor."
Photo gallery - One Direction play Madison Square Garden, New York City:
She later added: "Now front page of The Sun? Must be a slow news day in the UK", and stressed that "nothing happened" between her and Styles.
Swift and Styles had been dating for a few months, including holidaying with Justin Bieber and Selena Gomez over Christmas and sharing a New Year's Eve kiss in Times Square.
Watch Taylor Swift's 'I Knew You Were Trouble' music video below: